Capital Markets: "Tariffs Roil Markets" (governments still talking)

From Marc to Market:

Overview: The US made good on its threats to levy 25% tariffs on Canada and Mexico, and 10% tariffs on China. There still seems to be skepticism in the market, with many thinking the tariffs on Canada and Mexico may not last the week. Trump will reportedly talk with Trudeau and Sheinbaum today. The dollar did not trade high so much it was marked sharply higher in initial activity. That the Canadian dollar and Mexican peso was hit the hardest is not surprising, but the euro, Australian dollar, and Swedish krona drop has been nearly as greater as the Canadian dollar. The South African rand has also been targeted following the US threat to cut all funding to South Africa for a law passed month that gave the government the power to acquire land from private parties if it is in the public interest (eminent domain?).

Equities seemed to do well last week despite the pending tariffs, though pre-weekend activity saw North American markets fall. Today the reality struck. Hong Kong was an island of stability amid sharp regional losses of as much as 3.5% in Taiwan, and more than 2.5% in Japan and South Korea. Europe's Stoxx 600 is off 1.5% to snap a four-day advance. It is the largest decline in over a month. US index futures are pointing to 1.3%-1.6% losses. European benchmark 10-year yield are 4-5 bp lower, while the 10-year US Treasury is little changed near 4.55%. The US two-year yield is up nearly eight basis points to 4.27%, while European two-year yields are off 4-6 bp, and Canada's is eight basis points lower. Gold recovered from its initial sell-off (to ~$2772) and has returned to the $2800 area. The record high set before the weekend was slightly above $2817. March WTI gapped higher and reached nearly $75.20 before stalling. It is hovering near $74 now.

USD: The Dollar Index gapped higher in response to the tariff announcements. The pre-weekend high was slightly above 108.55, near the 20-day moving average. Today's low is about 109.16. The peak so far was near 109.90. The high from mid-January was a little shy of 110.20. President Trump indicated he will talk with Canada's Trudeau and Mexico's Sheinbaum today....

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Tariffs Incoming: Analysts React

From Yahoo Finance, February 2:

.... Here are some of the most actionable insights from the Street that have crossed my inbox so far.

Morgan Stanley Public Policy Research Team
"Our economists expect that fully implemented tariffs would have meaningful consequences. A recession in Mexico becomes the base case. US Inflation could be 0.3% to 0.6% higher vs baseline over the next 3-4 months (putting headline personal consumption expenditures inflation at 2.9% to 3.2%) and US growth could be -0.7% to -1.1% lower versus baseline over the next 3-4 quarters (putting real GDP growth at 1.2% to 1.6%). We see a similar or larger growth drag than the 100 basis point hit to Asia and China’s growth in 2018-19. Full implemented tariffs with staying power don’t appear to be in the price of key markets: A bullish scenario for US Treasury duration, as weaker growth expectations increase demand beyond short maturities; meaningful US Dollar strength relative to Peso & Canadian Dollar; US equities may come under pressure, and services should outperform consumer goods."

EvercoreISI Economics Team
"US growth is likely to take a hit as countries move away from US exports, investment falls, and employment declines. Federal receipts should increase, all else equal; some research estimates $1 trillion over the next decade. Our macroeconomic teams have estimated a 40 basis point increase in inflation and a 40 basis point drag on growth in the back half of the year."

EvercoreISI China Strategist Neo Wang
"Timing of Trump’s tariff announcement likely offended both Chinese government and people because the country is still on Chinese New Year holiday. Moreover, news of the tariff slap arrived in China in the morning of February 2, coinciding with this lunar year’s 5th day, which is the day for most Chinese to worship their God of Wealth with offerings and wishes. Unfortunately, Trump stole the attention with his wealth-destructing tariffs, an inauspicious development indeed. This first 10% tariff seems at least aimed to gain an upper hand in the negotiation on TikTok, or force Beijing to the table if negotiation hasn’t started."

JP Morgan Metals & Mining Analyst Bill Peterson
"Many investors we’ve spoken with continue to feel recent rhetoric may be a negotiation tactic given timing has been pushed out since Inauguration Day and timing was briefly pushed to 3/1 before being reversed. Implications to demand destruction longer-term always remains a key concern. Among our coverage, we see the biggest financial risk to Alcoa (AA), GrafTech International (EAF) and Cleveland Cliffs (CLF). On AA, ~40% of Alcoa’s operating smelter capacity is in Canada (vs. only 13% in the US) and ~70% of that production is shipped to the US. Management has indicated it would take 1-2 quarters for trade flows to reshuffle, which would have material implications on near-term earnings. On EAF, its Mexico-based Monterrey facility is the primary source of supply for its US and North America-based customers, likely driving customers to shift to cheaper US-based production (i.e., Tokai/Resonac) and/or India imports, which have been on the rise as of recent. If US graphite electrode pricing were to move high enough (and stay sticky) this could incentivize GrafTech to restart its US-based St.Mary’s facility, but this is a high-cost facility and the underlying demand environment remains sluggish. On CLF, we note risk to its newly acquired Canada exposure given 25-40% of SteelCase's revenues (FY22-1H24) were largely generated in the US."

22V Research Strategist Michael Hirson
"For the near term, we expect Beijing to impose only symbolic tariff increases (if any) on China’s imports from the US. We also expect China’s informal retaliation (such as directing commodity purchases away from the US) to be light as Beijing continues to explore a broader deal with Trump. Could Beijing mollify Trump with actions on fentanyl? The biggest US complaint with Beijing is that Chinese chemical companies are the main source of precursors for fentanyl products, which are then produced in Mexico and third countries. US-China cooperation on fentanyl has improved since the November 2023 Biden-Xi summit, though Beijing could do more to satisfy US concerns with a tougher crackdown on firms exporting to Mexico. Beijing will likely take some specific actions in this regard in coming months, while promising to take stronger measures as a part of a potential US-China deal. What about the broader outlook on US-China trade tensions? We continue to hold a base case that Trump will end up imposing additional tariffs on China imports beyond this initial 10%. These may wait for the outcome of trade policy reviews due on April 1, but of course could come sooner (if Trump becomes impatient) or later (if he explores a US-China trade deal). Trump’s fondness for tariffs, the optics of a very large deficit with China, and the domestic politics of targeting China all make it unlikely that he stops here. We do not dismiss the possibility of a US-China trade deal, though see the political bar as fairly high, especially in this first year of Trump 2.0."

Bernstein Digital Assets Analyst Gautam Chhugani
"Bitcoin and crypto markets are a good reflection of risk-on sentiment in the near term. If tariffs mean stronger dollar, higher inflation and reduced prospects of rate cuts in the short term, it means lower global liquidity for risk-on assets. In the short term, Bitcoin and crypto markets correlate with risk-assets and particularly during weekends, crypto is the only barometer of risk. Thus, crypto sell off is not surprising. Given the global macro dislocation and potential inflationary pressures, shouldn't Bitcoin act as a store of value? With both stronger dollar and higher inflation, why has Bitcoin not reacted as a store of value? Bitcoin trades differently on different time frames. On a longer time frame, as governments carry higher debt and higher deficit, leading to more monetary debasement, Bitcoin holds relative value to the dollar, as is evident in Bitcoin's long term compounding history. But over short time frames, Bitcoin is correlated to risk-assets. There is no evidence of short term un-correlated Bitcoin market unless there is a flight to safety from the fiat banking system."....

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Tariffs: But What About Temu?

The parent company, PDD Holdings, may have a bit of a problem. Thanks to a friend who reads all the fine print.

From the White House, February 1:

IMPOSING DUTIES TO ADDRESS THE FLOW OF
ILLICIT DRUGS ACROSS OUR NORTHERN BORDER

(h)  For avoidance of doubt, duty-free de minimis treatment under 19 U.S.C. 1321 shall not be available for the articles described in subsection (a) and subsection (b) of this section.

That's subsection h of  section 2 and it goes straight to the heart of Temu's business model. 

Now if only I weren't such a big chicken about shorting non-frauds in a bull market.

Initial Effects Of Tariffs On Consumers

Now the good news is that after the tariff costs work their way through the economy the inflation effect will be transitory. And I have it from multiple very good authorities that transitory is nothing to worry about.

From ABC News, January 31:

These prices could climb within days if Trump slaps tariffs on Canada and Mexico

The Trump administrations says the tariffs will take effect on Feb. 1.

Tariffs on goods from Mexico and Canada that are set to take effect could hike the price of a gallon of gasoline for some drivers by as much as 70 cents and send grocery bills climbing, experts told ABC News.

The Trump administration on Friday reiterated plans to slap 25% tariffs on all products from Canada and Mexico on Feb. 1. Those countries make up two of the three largest U.S. trading partners, government data shows.

Tariffs of this magnitude would likely increase prices paid by U.S. shoppers, since importers typically pass along a share of the cost of those higher taxes to consumers, experts said. The policy could raise prices for an array of products ranging from tomatoes to tequila to auto parts.

“The scary thing is the list of products is very, very long,” said Jason Miller, a professor of supply-chain management at Michigan State University.

The price impact remains unclear, however, since businesses within the supply chain could opt to take on some or all of the tax burden, some experts added, noting the tariffs may not take effect at all since Trump has previously used them as a source of leverage in international negotiations.

In response to ABC News' request for comment, a White House spokesperson touted Trump's previous economic policies, including tariffs.

“In his first administration, President Trump instituted an America First economic agenda of tariffs, tax cuts, deregulation, and an unleashing of American energy that resulted in historic job, wage, and investment growth with no inflation. In his second administration, President Trump will again use tariffs to level the playing field and usher in a new era of growth and prosperity for American industry and workers," White House spokesperson Kush Desai told ABC News.

Here’s what to know about which products could see price increases as result of the tariffs, according to experts:

Gas
Mexico and Canada account for 70% of U.S. crude oil imports, which make up a key input for the nation’s gasoline supply, according to the U.S. Energy Information Administration, a government agency.

Those imports come primarily from Canada, which sends crude oil to U.S. refineries built specifically to process the crude and redistribute it as car-ready gasoline, Timothy Fitzgerald, a professor of business economics at the University of Tennessee who studies the petroleum industry, told ABC News.

Gasoline that originates as Canadian crude reaches customers in the upper Midwest as well as some along the East and West coasts, Fitzgerald said. For those drivers, he added, prices could rise between 40 and 70 cents per gallon of gasoline.

“You could definitely be looking at 50 cent-a-gallon increases in a lot of parts of the country,” Fitzgerald added, noting that the effects would be limited to the regions that rely on imported crude.

The tariff-related price increase may combine with a seasonal price hike set to take effect within weeks, since demand for gas typically grows as travel picks up in the warmer spring weather, experts said.

That seasonal price impact could add another 30 cents per gallon, putting the total increase in gasoline prices at $1 per gallon if the tariffs remain in place at the onset of spring, Fitzgerald said.

Tomatoes and Avocados
The U.S. imported $38.5 billion in agricultural goods from Mexico in 2023, making it the top recipient of such products, U.S Department of Agriculture data showed. Those imports include more than $3 billion worth of fresh fruits and vegetables.

Mexican imports account for a large share of some fruits and vegetables routinely eaten by Americans.

Roughly 90% of avocados eaten in the U.S. last year originated in Mexico, USDA data showed. Other products with a high concentration of Mexican imports include tomatoes, cucumbers, bell peppers, jalapenos, limes and mangos, Miller said.

It would be difficult for the U.S. to replace those goods with domestic production or an alternative supplier, making it likely that prices would rise significantly if the tariffs take effect, he added.

“You’d certainly expect to see an impact on prices,” Miller said.

The U.S. also imports large quantities of beer, tequila and other alcoholic beverages from Mexico, experts said. In 2022, the U.S. imported about $26 billion worth of alcoholic drinks from Mexico, according to the USDA.

“Don’t forget all that beer we import from Mexico,” Miller said.

Cars and auto parts
Carmakers and consumers depend on the auto industry’s deep ties to Canada and Mexico, making tariffs a threat to prices, experts said.

Mexico and Canada make up the top two U.S. trading partners for both finished motor vehicles and car parts, according to a Cato Institute analysis of data from the U.S. International Trade Commission.

In 2023, Canada and Mexico accounted for nearly $120 billion worth of U.S. motor vehicle imports, which totaled about 47% of all such vehicles imported that year....

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The bad news, especially for the auto parts and components manufacturers is that they will have to pay the tariffs before they can recover their cost increases from the American auto companies. Meaning there will be bankruptcies in Canada and Mexico.

And the drug cartels that control the avocado trade will have to dust off their dynamic pricing playbook.

 

"It Took $5.8 In Debt To Generate $1 Of US "Growth" In The Fourth Quarter"

Keeping in mind that every penny of deficit spending is stimulus, why does the U.S. economy need over $150 billion of stimulus per month in what is considered by many commentators to be a good economy? This is a) not sustainable and b) demented.

From Zerohedge, January 31:

We will have much more to say on the composition of yesterday's first estimate of Q4 GDP which as we highlighted was a very ugly print, and only another quarter of extensive government spending (the 10th quarter in a row) and a record beat of consumer spending relative to expectations, prevented the GDP print from sliding into the 1% range...

... but even if one assumes that there was nothing abnormal about the number itself, the context in which it was derived was astounding. Here's why.

As the BEA reported, in Q4 US GDP grew at a seasonally adjusted rate of 2.3%, below the 2.6% estimate and down from the 3.1% growth pace in Q3. More specifically, the number represented the annualized increase in the 131BN change between what the BEA calculated was chained Q3 GDP ($23.400 trillion) and Q4 GDP ($23.531 trillion). In other words, to keep it simpler, in Q4 the US economy actually grew some $130.6 billion chained dollars.

So far so good. The only problem is what funded this growth, and as regular readers are well aware, in the US the source of all growth is - and for the past 100 years - has been debt, and boy was Q4 a doozy.

As the chart below shows, while the US generated $131bn in chained GDP growth in Q4, this was the result of a $711 billion increase in the US budget deficit, which in turn was funded with a $754 billion increase in debt which, as of Dec 31, 2024, stood at a record 36.218 trillion. The Q4 snapshot is shown below.

And it's not just Q4. Extending this analysis to all of 2024 we find an almost identical pattern: in the full year 2024, US GDP grew by $570 billion from $22.961 trillion to $23.531 trillion, growth which was made possible by a near record $2.034 trillion increase in the budget deficit, which in turn was funded by a mammoth $2.2 trillion increase in debt.

The bottom line: in Q4 it took $5.8 dollars of debt to create $1 dollar of growth, an increase from $3.5 in Q3 and from $1.5 in Q2, which is to be expected: as we revealed in the summer of 2023, US growth was one giant illusion and was entirely the result of the Biden admins' massive debt creation spree. No surprise that with the election in Q4 2024, that's when the bulk of the debt-fueled frenzy would take place.

Taking a bigger picture look, for the full year 2024, it took $3.9 dollar in debt to generate $1 in growth, an increase from the $3.6 in 2023....

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From July 2021's "Diminishing Returns: Getting Less And Less For Each Dollar of Deficit Spending Means Disaster Is Locked In"

A topic near and dear to our jaded hearts.

This is a real problem, whether you call it "Marginal Productivity of Debt" or "Debt Saturation" or "Bang-for-the-Buck"*, we are running faster and faster just to stay in place. This is not a new phenomena, the piddly 6.5% GDP growth we just saw, despite the trillions and trillions in new debt is just the latest example...

Now I know the President's budget is on a fiscal year and the GDP numbers are on a calendar year but the point withstands that petty quibble compared to the importance of the original question: 

"Why does the U.S. economy need over $150 billion of stimulus per month?..."

*Years ago we called it Sweet, sweet Biden love in reference to the fact the former Vice-President was overseer of the ARRA stimulus in 2009 - 10 and the Recovery Summer in 2010.....I don't know why I was channeling Chef from South Park

London Mansion Seized From Saudi Royals Sold for £139 Million

From Bloomberg, January 24:

A mansion in London’s Regent’s Park that was seized by creditors to members of the Saudi Royal family was sold at a 44% discount to the asking price almost two years after it was put up for sale.

The Holme, a 40-room house whose neighbors include the US Ambassador, was bought for about £139 million ($172 million) by Zedra Trust Company (Uk) Limited on Dec. 13, UK property records show. That price is still one of the highest ever paid for a UK residence. The documents didn’t reveal the ultimate beneficial owner.

The white stucco villa was previously owned by a Guernsey-based company Quendon Ltd., which listed children of Prince Khaled bin Sultan al-Saud as its beneficial owners. Brokers were appointed to sell the property on behalf of creditors to the company in early 2023, with an asking price of £250 million, Green Street News reported at the time....

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We've looked at the houses inside The Regent's Park a few times. Here's a post from 2013:

1) The Sultan of Brunei's shack in Regent's Park:

If location, location, location really is the first rule of real estate this is probably the most valuable private property in England. As a starting guess, £200 million......

(that little garden in not part of the St. John's Lodge property and is actually accessible to the public) 

 

If these prices seem a bit rich, there is always Mulvaney & Rogers:

 

 

 

This house went for £200K. 

It's a doll house but a very nice one.

"Capitalisn’t: Why This Nobel Economist Thinks Bitcoin Is Going to Zero" (Fama with Bethany McLean and Luigi Zingales)

From the University of Chicago, Booth School of Business' Capitalisn't pod, January 30:

In December 2024, Bitcoin, one of the earliest cryptocurrencies and undoubtedly the most famous, hit $2 trillion in market capitalization, bigger than Tesla, Meta, and Saudi Aramco. In this episode, Chicago Booth’s Eugene F. Fama—a Nobel laureate sometimes called the “Father of Modern Finance”—predicts it will go to zero within 10 years.

Legendary investor Ray Dalio called crypto a bubble a decade ago; now, he calls it “one hell of an invention.” Larry Fink of BlackRock previously referred to Bitcoin as an index of money laundering; today, he sees it as “a legitimate financial instrument.” During his first term in the White House, US President Donald Trump called crypto “not money, whose value is highly volatile and based on thin air”; less than 36 hours after launching his own cryptocurrency prior to his second inauguration, Trump appeared to have made more than $50 billion on paper for himself and his companies. Amidst this noise of crypto doubters changing tune, Fama joins Capitalisn’t hosts Bethany McLean and Luigi Zingales to discuss why he remains dubious about Bitcoin’s ambitions.

Bitcoin uses more electricity than many countries—around 91 terawatt-hours annually. Is this amount unsustainable? What makes Bitcoin’s value so volatile, and what are the implications for the banking sector and our economy? If cryptocurrencies’ purpose is a reaction to an underlying distrust in financial institutions, can decentralized blockchain, the technological ledger that enables anonymous crypto exchange, fix it? Last but not least, why do supporters of a decentralized service, whose value lies in its existence outside traditional government structures, need to spend billions in lobbying to convince politicians, including the president, of its utility?

Audio transcript

Eugene F. Fama: Cryptocurrencies are such a puzzle because they violate all the rules of a medium of exchange.

Bethany: I’m Bethany McLean.

Phil Donahue: Did you ever have a moment of doubt about capitalism and whether greed’s a good idea?

Luigi: And I’m Luigi Zingales.

Bernie Sanders: We have socialism for the very rich, rugged individualism for the poor.

Bethany: And this is Capitalisn’t, a podcast about what is working in capitalism.

Milton Friedman: First of all, tell me, is there some society you know that doesn’t run on greed?

Luigi: And, most importantly, what isn’t.

Warren Buffett: We ought to do better by the people that get left behind. I don’t think we should kill the capitalist system in the process.

Bethany: On Friday, January 17, as everyone probably knows, President-elect Trump launched his own cryptocurrency. The—how do you call it—the $Trump?

Luigi: I have no idea.

Bethany: The Trump.

Luigi: I think it’s called the Dollar Trump.

Bethany: As of Sunday morning, Trump appeared to have made more than $50 billion on paper for himself and his companies. Then, on Sunday night, now-First Lady Melania Trump launched her own coin, which was worth more than $5 billion within a couple of hours. In addition, Bitcoin is now the seventh most valuable asset in the world.

Luigi: This is not The Onion or a skit for Saturday Night Live. This is capitalism—or maybe we should say capitalisn’t—in the second quarter of the 21st century.

Bethany: I have to warn you, Luigi, a disclaimer, that “Trump memes are intended to function as an expression of support for and engagement with the ideals and beliefs embodied by the symbol, Trump, and the associated artwork, and are not intended to be or be the subject of an investment opportunity, investment contract, or security of any type. Gettrumpmemes.com is not political and has nothing to do with any political campaign or any political office or government agency.” So there.

Luigi: And I’m six feet five inches.

Bethany: You can be any height you want on this podcast, Luigi.

Luigi: Fantastic. Thank you for the warning. Otherwise, I would have rushed to buy Trump. I grew up in a world in which our elderly were reminding us all the time that money doesn’t grow on trees, but they were wrong. It seems that in the 21st century, money does grow on digital trees, and it grows really, really fast.

Bethany: Maybe this isn’t new. Do you remember the Beanie Babies frenzy, Luigi?

Luigi: Of course.

Bethany: For our younger listeners, they were a line of stuffed animals that were popular in the 1990s. Beanie Babies were created as a toy, but some became collection items. The Princess Bear Beanie Baby, released in 1997 in honor of Princess Diana, is listed today on eBay at $900,000.

Luigi: Are you going to buy one?

Bethany: Are you kidding? I do like furry animals, as you know, but I like large, furry animals that make loud barking noises, not small, stuffed furry animals.

Luigi: And, hopefully, that cost a little bit less than that.

Bethany: Yes. Even my extremely deranged and expensive dogs cost quite a bit less than that.

Luigi: This is a really big puzzle, and to explain this big puzzle, we need, in fact, the father of modern finance: the 2013 Nobel Prize winner, Eugene Fama.

Bethany: Before we talk to Gene Fama, let’s do a little bit of a refresh for our listeners, and frankly for me, on some of the crypto jargon. How exactly would you define a cryptocurrency?

Luigi: A cryptocurrency is a digital currency that is not backed or maintained by any central authority but is self-supported by a network, generally called blockchain. Bitcoin is the first and by far the most famous of all the cryptocurrencies. I think it represents more than half of the entire capitalization of all the cryptocurrencies altogether.

In spite of its fame, Bitcoin has two major disadvantages. The first one is that to function, Bitcoin consumes a lot of computing power, but most importantly, a lot of energy. In a year, the function of Bitcoin takes as much energy as the entire country of Poland.

Second, it cannot be integrated into a programming language. The proper term is that it doesn’t have smart-contract functionality.

The new cryptos—and the most important one is probably Ethereum—have this smart-contract functionality, and almost all of them have moved away from this expensive, energy-burning mechanism used by Bitcoin.

The quantity of Bitcoin is, by and large, fixed. It grows slowly, there is a cap, but basically, for practical purposes, think about it as the quantity of Bitcoin is predetermined. You can have as many cryptos as you want of different types, but for Bitcoin, there is only a predetermined amount.

It’s a little bit like with Beanie Babies. For each one of them, the quantity is fixed, and you can probably invent different animals, but you cannot add more of the Princess Bear because they took it out of production.

What determines the price of Princess Bear is the demand. If demand goes up and down, prices go up and down. For Princess Bear, I don’t know what drives the demand, but for Bitcoin, a lot of the demand is driven by speculation about other people buying Bitcoin. This is very destabilizing, because it’s self-reinforcing, and that creates enormous fluctuations in the price of Bitcoin, which makes Bitcoin completely unsuitable to be a currency. Why they’re called cryptocurrency, I don’t know.

Bethany: So, they’re just like Beanie Babies. We could just call them Crypto Babies instead of cryptocurrency?

Luigi: At some level, yes. Why do people buy Beanie Babies? Not to play with them, because if you pay $900,000 for Princess Bear, by playing with it, you are basically dissipating $900,000. You’re going to keep it in a sealed bag, at the proper temperature, and maybe you watch it. Anyway, you get my point.

Bethany: I do.

Luigi: I think that the reason people buy Bitcoin is for investment. Why? Because they expect to be able to sell it to other people.

Bethany: I like my lingo suggestion. I think Crypto Babies should take off, or maybe even better, Crypto Beans. I think that would be pretty perfect.

Luigi: I would actually prefer Beanie Trump.

Bethany: That could work, too.

Luigi: We should launch our own crypto, Beanie Trump.

Bethany: Onward with terminology. Isn’t the purpose of a stablecoin supposed to be that it gets rid of this issue of volatility? What is a stablecoin?

Luigi: A stablecoin is basically a cryptocurrency whose value is tied to one of another nonvirtual currency. Think about it as tied to the dollar. Let’s take the most secure form. Imagine that you buy a lot of dollars, you put them in a vault, and then you issue some stablecoins one to one with the number of dollars in the vault.

The advantage is that now you have an instrument that you can trade with. You can buy stuff, 24/7, all over the world. You want to buy your caviar from Iran? You can buy your caviar from Iran with stablecoins. You cannot do it with US dollars.

For the issuer, the big advantage is that you don’t exactly put it in a vault. You put it in a Treasury bond, and you earn interest. You issue a liability that has zero interest, and you invest in an asset at 5 percent. If you multiply that by billions, you get rich pretty quickly.

Bethany: OK. Back to Trump, then. What is a meme coin?....

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Over the years we've poked some gentle fun at Professor Fama and his partner in crime, Professor French (now at Dartmouth).

Among our many posts on Fama and/or French, from 2014:
December 2014
What a Long Strange Trip: From CAPM To Fama-French to Four (or more) Factors
Ours goes to eleven. 

To February 2020:
Feb. 25
Regarding the Efficient Market Hypothesis....  
On days like today you might find Eugene Fama in some Chicago watering hole with his designated driver, Kenneth French. As we noted in another context ["Is semi-variance a more useful measure of downside risk than standard deviation?"]:

...If yous see them together at some Chicago dive bar, Fama is the one with the Nobel around his neck, French the one saying "For Chrissakes Gene."

I have no explanation for the market's collective Wile E Coyote moments:

but I am pretty sure that at Friday's close the market was not pricing in "all available information".

This lack of facile, erudite (sounding) verbiage on my part may necessitate the implementation of either a (tardy) "pivot to video" or cooking tips. We'll try the latter first.
From Britain's Royal Society:...

The practitioner:
February 25
"How Will You Play the Oversold Bounce?" 
Homie don't play.
Homie pivots to video

If you've stuck with me this far here is the Fama/French Forum hosted at Dimensional Fund Advisors....

The Mexico Canal Corridor

Not an existential risk for the Panama Canal.

From Columbia 1, December 24, 2024:

Mexico New Interoceanic Corridor Railway Challenges Panama Canal

Mexico is constructing an Interoceanic Corridor railway to provide an alternative to the Panama Canal and ease international trade. The railway aims to alleviate the strain on the Panama Canal, which is struggling with low water levels due to a prolonged drought. The canal has raised toll prices significantly, and with water levels at an all-time low, shipping through the canal has become increasingly difficult.

The Interoceanic Corridor
The $7.5 billion project spans 188 miles across the Isthmus of Tehuantepec, offering a route for containers to be transferred from ships to trains and then transported to the opposite coast for reloading onto ships to complete their journeys. This initiative revives an old project—the railway was originally opened in 1907 but was abandoned after the Panama Canal became operational.

The Interoceanic Corridor is also intended to address poverty in Mexico. Running through the states of Veracruz and Oaxaca, both of which face high poverty rates, the project is expected to attract investment and improve local infrastructure. The railway will have ten stops across the two states, with ports on both the Atlantic and Pacific coasts. The plan also includes the possibility of linking the corridor to the Tren Maya, extending the network to Cancun.

The Mexican government has invested $6 billion in the project, with an additional $2 billion coming from private investors....

A map of Mexico’s Interoceanic Corridor project and its impact on regional maritime transport. 

Credit: Mexico Government

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Three quick notes:

1) Some of the information on the drought was already out of date when this piece was written. With the reversal of the El Niño–Southern Oscillation the water came back. See June 2024's Logistics: "Panama Canal Continues to Ease Drought Restrictions as Rainy Season Kicks Off" for some of our links.

2) There is a similar proposal for South-East Asia but these things are not easy to do economically: Maybe Singapore Won't Be Bypassed: "Thailand's 'land bridge' ambitions face fresh roadblocks".

3) Sometimes it seems that Columbia would like to have Panama back in Gran Columbia.

"French investigators open fraud probe against crypto platform Binance"

From Reuters, January 28:

• France opens judicial probe into Binance
• Charges include money laundering, tax fraud
• Binance denies allegations, says will fight charges

French investigators said on Tuesday they had opened a judicial probe into money laundering, tax fraud and other charges at Binance, the world's largest cryptocurrency exchange, which said it denied the allegations.

The economic and financial crime section of the Paris public prosecutor's office (JUNALCO) said in a statement that the probe includes money laundering in connection with drug trafficking.

 

The investigation is examining the period from 2019 to 2024, involving offences committed in France but also in all European Union countries, JUNALCO said.

 

"Binance fully denies the allegations and will vigorously fight any charges made against it," a spokesperson for Binance said in an emailed statement, saying that the matter was "several years old".

 

Binance's founder and former CEO Changpeng Zhao was last year sentenced to four months in prison, after pleading guilty to violating U.S. laws against money laundering. Binance agreed to pay a $4.3 billion penalty.

 

Following a years-long probe, U.S. prosecutors said Binance had employed a "Wild West" model that welcomed criminals, and did not report more than 100,000 suspicious transactions with designated terrorist groups.... 

....MUCH MORE

 

And in other CZ news, something I may not be completely understanding, from Bloomberg, January 23:

 

Crypto’s Richest Man Turns VC Firm Into Giant Family Office

YZi will manage assets of Zhao and Binance co-founder Yi He
Zhao was released from correctional facility in late September

Changpeng “CZ” Zhao, a few months out of prison and worth $70 billion thanks to the relentless crypto rally, is turning the former venture capital arm of his Binance Holdings Ltd. into a family office.

Binance Labs, which oversees about $10 billion of crypto-related assets, will be renamed YZi Labs, according to a statement on Thursday. Zhao brought back Ella Zhang, who helped set up Binance Labs in 2018 and left two years later, to run the outfit. YZi Labs will also manage the wealth of Binance co-founder Yi He, with whom Zhao has three children.

Zhao, 47, built Binance into the dominant crypto exchange while maintaining that it didn’t have a global headquarters. His approach to compliance didn’t sit well with US authorities, who in 2023 charged Binance and Zhao with failing to prevent cybercriminals and terrorists from trading on the platform. Zhao agreed to pay a $50 million fine, stepped down as CEO and was sentenced to four months in custody. He was released in September.

YZi Labs, a play on the Binance co-founders’ names, is now “purely a family office investment vehicle,” Zhang said in an interview.

After publication of this story, YZi Labs issued a statement to Bloomberg News saying it is not a family office, but rather “a venture capital and incubator firm dedicated to fostering innovation and supporting investments across various sectors.” It also said He isn’t involved in YZi Labs’s day-to-day operations.

The firm doesn’t have a formal headquarters as its staff operate remotely, a spokesperson said.

There’s no immediate need for Zhao to inject more money into YZi Labs, Zhang said. His $69.8 billion fortune is ranked 22nd in the world by the Bloomberg Billionaires Index, which estimates it to consist entirely of his stake in Binance Holdings.

A billionaire turning his business into a family office after a brush with authorities isn’t entirely without precedent.

SAC Capital Advisors, founded by legendary investor Steve Cohen, pleaded guilty in 2013 to reaping hundreds of millions of dollars in illegal profits and allowing a culture of criminality that rewarded brazen insider trading. Cohen — who consistently denied wrongdoing — was never charged or sued, though he agreed not to manage outside money for two years, and turned his firm into a family office.

After his release from a low-security California prison, Zhao pledged in a post on X to focus on investments that would prioritize “impact” over returns. He also said a new endeavor named Giggle Academy, a nonprofit online education platform, would be a big part of his life. By then, Binance had begun the process of severing ties with the venture capital unit.....

.....MUCH MORE

"US Probing If DeepSeek Got Nvidia Chips From Firms in Singapore"

From Bloomberg, January 30:

• Nvidia says it ‘insists’ that customers comply with laws
• Singapore accounts for about 20% of Nvidia’s revenue

US officials are probing whether Chinese AI startup DeepSeek bought advanced Nvidia Corp. semiconductors through third parties in Singapore, circumventing US restrictions on sales of chips used for artificial intelligence tasks, people familiar with the matter said.

DeepSeek recently released a chatbot, called R1, that in some respects performs as well as comparable tools from the US, suggesting that China is further ahead in the AI race than previously believed. Some prominent engineers have marveled at R1’s capabilities, and DeepSeek has touted the tool’s low cost and efficiency, prompting rivals to speculate whether it was built on the back of Western technology. 

Officials in the White House and Federal Bureau of Investigation are also trying to determine whether DeepSeek used intermediaries in the Southeast Asian nation to purchase Nvidia chips that the US has banned from sale to China, said the people, who requested anonymity to relay private conversations.

DeepSeek didn’t immediately respond to a request for comment. An Nvidia spokesperson said in a statement that “we insist that our partners comply with all applicable laws, and if we receive any information to the contrary, act accordingly.” The company issued a statement on DeepSeek earlier this week that indicated it believes the Chinese company didn’t violate US restrictions.

An FBI spokesperson declined to comment, while a representative for the White House didn’t immediately respond to a request for comment. The Singapore embassy in Washington couldn’t be reached outside of office hours.

Howard Lutnick, President Donald Trump’s pick to lead the Commerce Department, suggested on Wednesday that DeepSeek evaded US export controls. 

“Nvidia’s chips, which they bought tons of, and they found their ways around it, drive their DeepSeek model,” Lutnick, who would enforce semiconductor trade restrictions as the Commerce head, told senators in his confirmation hearing Wednesday. “It’s got to end. If they are going to compete with us, let them compete, but stop using our tools to compete with us. So I’m going to be very strong on that.”....

....MUCH MORE 

Now Singapore is known as a pretty tech-savvy place but 20% of Nvidia's revenue flowing through the entrepôt seems like quite a bit.

"The Failed Strategy of Artificial Intelligence Doomers"

From Palladium Magazine, January 31:

In recent decades, a growing coalition has emerged to oppose the development of artificial intelligence technology, for fear that the imminent development of smarter-than-human machines could doom humanity to extinction. The now-influential form of these ideas began as debates among academics and internet denizens, which eventually took form—especially within the Rationalist and Effective Altruist movements—and grew in intellectual influence over time, along the way collecting legible endorsements from authoritative scientists like Stephen Hawking and Geoffrey Hinton.

Ironically, by spreading the belief that superintelligent AI is achievable and supremely powerful, these “AI Doomers,” as they came to be called, inspired the creation of OpenAI and other leading artificial intelligence labs whose technology they argue will destroy us all. Despite this, they have continued nearly the same advocacy strategy, and are now in the process of persuading Western governments that superintelligent AI is achievable and supremely powerful. To this end, they have created organized and well-funded movements to lobby for regulation, and their members are staffing key positions in the U.S. and British governments.

Their basic argument is that more intelligent beings can outcompete less intelligent beings, just as humans outcompeted mastodons or saber-toothed tigers or neanderthals. Computers are already ahead of humans in some narrow areas, and we are on track to create a superintelligent artificial general intelligence (AGI) which can think as broadly and creatively in any domain as the smartest humans. “Artificial general intelligence” is not a technical term, and is used differently by different groups to mean everything from “an effectively omniscient computer which can act independently, invent unthinkably powerful new technologies, and outwit the combined brainpower of humanity” to “software which can substitute for most white-collar workers” to “chatbots which usually don’t hallucinate.” 

AI Doomers are concerned with the former scenario, where computer systems outreason, outcompete, and doom humanity to extinction. The AI Doomers are only one of several factions that oppose AI and seek to cripple it via weaponized regulation. There are also factions concerned about “misinformation” and “algorithmic bias,” which in practice means they think chatbots must be censored to prevent them from saying anything politically inconvenient. Hollywood unions oppose generative AI for the same reason that the longshoremen’s union opposes automating American ports and insists on requiring as much inefficient human labor as possible. Many moralists seek to limit “AI slop” for the same reasons that moralists opposed previous new media like video games, television, comic books, and novels—and I can at least empathize with this last group’s motives, as I wasted much of my teenage years reading indistinguishable novels in exactly the way that 19th century moralists warned against. In any case, the AI Doomers vary in their attitudes towards these factions. Some AI Doomers denounce them as Luddites, some favor alliances of convenience, and many stand in between.

Most members of the “AI Doomer” coalition initially called themselves by the name of “AI safety” advocates. However, this name was soon co-opted by these other factions with concerns smaller than human extinction. The AI Doomer coalition has far more intellectual authority than AI’s other opponents, with the most sophisticated arguments and endorsements from socially-recognized scientific and intellectual elites, so these other coalitions continually try to appropriate and wield the intellectual authority gathered by the AI Doomer coalition. Rather than risk being misunderstood, or fighting a public battle over the name, the AI Doomer coalition abandoned the name “AI safety” and rebranded itself to “AI alignment.” Once again, this name was co-opted by outsiders and abandoned by its original membership. Eliezer Yudkowsky coined the term “AI Notkilleveryoneism” in an attempt to establish a name that could not be co-opted, but unsurprisingly it failed to catch on among those it was intended to describe.

Today, the coalition’s members do not agree on any name for themselves. “AI Doomers,” the only widely understood name for them, was coined by their rhetorical opponents and is considered somewhat offensive by many of those it refers to, although some have adopted it themselves for lack of a better alternative. While I regret being rude, this essay will refer to them as “AI Doomers” in the absence of any other clear, short name.

Whatever name they go by, the AI Doomers believe the day computers take over is not far off, perhaps as soon as three to five years from now, and probably not longer than a few decades. When it happens, the superintelligence will achieve whatever goals have been programmed into it. If those goals are aligned exactly to human values, then it can build a flourishing world beyond our most optimistic hopes. But such goal alignment does not happen by default, and will be extremely difficult to achieve, if its creators even bother to try. If the computer’s goals are unaligned, as is far more likely, then it will eliminate humanity in the course of remaking the world as its programming demands. This is a rough sketch, and the argument is described more fully in works like Eliezer Yudkowsky’s essays and Nick Bostrom’s Superintelligence....

....MUCH MORE

"AI Comes to the Apple Orchard—From Pollinating to Picking"

From the Wall Street Journal, January 29:

Researchers are developing robots that promise to automate a process that has always relied on human workers—and bees

Apple orchards are largely untouched by automation. But that could be changing.

Recent breakthroughs in robotics and artificial intelligence could enable robots to do much of the work that orchards require, potentially transforming how apples get to a fruit bowl near you.

A number of universities and startups are developing specialized robots for each stage of apple production, from pollinating the trees to fertilizing them, pruning them and harvesting the fruit.

The push for automation comes as orchards face rising labor costs, and as they’re evolving in a way that would mesh well with robot apple pickers. Modern growing techniques train trees into narrow, rectangular shapes of limited height—rather than the natural big, bushy shape with a rounded canopy—making it easier to reach the fruit.

Here’s how robots are potentially revolutionizing the orchard, step by step.

Pollinating
Researchers have developed robotic pollinators to help where there are no local bees to do the job. Orchards where bees are lacking currently pay to have them brought in from elsewhere.

The robots use cameras to identify apple blossoms. When they spot a target, a mechanical arm moves in close and releases a precise burst of pollen through a nozzle. Early results are promising. In tests conducted by researchers at Washington State University, 84% of targeted flowers were pollinated.

Researchers envision using these systems to strategically pollinate flowers in the most accessible locations on trees at the optimal time. This could help improve robotic harvesting by ensuring fruit grows where machines can best reach it.  

Pollinating only certain flowers this way would also limit the number of apples a tree produces, resulting in better-quality fruit. Orchard workers currently achieve this by thinning a tree’s fruit manually....

....MUCH MORE 

Perhaps, somehow, by the Grace of God, avoiding the horribly divisive issue already threatening the blueberry business:

CNN guest says women won’t have berries for smoothies if illegal immigrants are deported

And who will pick our cotton if Lincoln is successful?

‘Ticking time bomb’: how the fall of Syria’s prison camps could unleash 1000s of terrorists on the world

Then the people who backed the new boss, al-Julani, should do something about it.

From The Telegraph, January 30:

Observers are warning that detention camps housing followers of the notorious Isis caliphate are close to collapse 

In a desolate expanse of north-east Syria, where there is little more than dirt and dust, the sprawling Al-Hol camp rises from the desert.

Hot and dry in summer, with relentless winds whipping up sandstorms, and exposed to biting cold in winter, the high-security facility is hemmed in by metal fencing and patrolled by Western-allied Kurdish-led troops.

Behind the barbed wire, under the eyes of surveillance cameras and watchtowers, is the largest single remnant of the bloody caliphate once ruled by Isis. The camp is home to thousands of women and children, the relatives of the terror group’s legions of male fighters, the majority of whom are held at an unknown number of prison facilities spread across the region.

Among those facing indefinite detention in Al-Hol, the smaller Al-Roj camp farther north, and the secretive jails are a number of terror suspects linked to Britain – including Shamima Begum and “Jihadi Jack” Letts – who travelled to Syria and Iraq to join Isis between 2012 and 2019. Some 20 British women, 40 children and 10 men are believed to be held in facilities across the region in total.

The fate of the prisoners has been the subject of years of concern and debate following the fall of Isis’s caliphate six years ago. To this day, foreign governments and the Kurdish-led Syrian Democratic Forces (SDF) continue to wrestle with the complexity of finding a long-term solution to the security problems they pose.

Those worries have now taken on a heightened sense of urgency as Syria enters a new phase of uncertainty following the fall of Bashar al-Assad. On Wednesday, Ahmed al-Sharaa, Syria’s de-facto leader and the head of the Islamist Hayat Tahrir al-Sham (HTS) rebel group, abolished the country’s 2012 constitution and declared himself president for a “transitional period” following a meeting of armed factions in Damascus.

The announcement came after officials and analysts warned earlier this week that the Isis terrorists held in north-eastern Syria could escape from camps and prisons as a result of Donald Trump’s cuts to foreign aid.

US funding to the SDF was halted for several days, reportedly leading to local guards not turning up to work. An intervention by the US state department on Monday reinstated funding for two weeks, but it remains unclear what will happen after the stopgap measure expires.

“This is the biggest population of incarcerated terrorists, anywhere in the world, ever – within an active war zone in which Isis remains determined to launch mass breakout attacks,” Charles Lister, the director of the Countering Terrorism and Extremism programme at the Middle East Institute, said on Monday. “The threat… cannot be understated.”

Guards have warned that attempted prison breaks could be imminent.

Khaled Ibrahim, an official in north-eastern Syria’s de facto autonomous region, describes the facilities across the region as “ticking time bombs”.

“Detainees consider themselves part of Isis’s retaliatory legacy,” he says, adding they have been laying in wait for an opportunity to strike back.

Those held in the overcrowded camps, where rows of weather-beaten tents stretch off into the distance, surrounded by overflowing sewage, are near-constantly exposed to extremist ideologies. There are few rehabilitation programmes in place. Al-Hol itself has previously been described as a “mini caliphate”, populated by some 40,000 women and children brainwashed by years of Isis indoctrination. Security control is limited to the facility’s perimeter, with no clear authority or effective monitoring within the camp itself....

....MUCH MORE

 

Or let the ISIS goons explain their actions to the Kurdish and Yazidi women. From a March 2019 post:

Female Yazidi worshippers gather to remember the thousands of women and girls seized as sex slaves, tortured and murdered by ISIS fanatics
I had intended to post this on International Women's Day but was counseled to hold off.
We have a special admiration for the Yazidi women and their Kurdish sisters and do think they should be celebrated....

****

....Previously on the Yazidi and Kurdish women:
Feb. 2016
Hundreds of Former Sex Slaves Take Up Arms To Do What Obama, Cameron Won't: Kill ISIS Pigs
Nov. 2016
The Battle to Retake Raqqa Syria From ISIS Is Being Led By A Kurdish Woman: Jihadis, Erdoğan Not Pleased
This woman is leading efforts to send ISIS to hell, but Turkey has other plans

 

 Killer of ISIS swine 

 

Commander of Bethnahrin Women Protection Units: 

"We & YPJ will take revenge for all the women who have been enslaved by IS" 

(ANHA) #IWD2017

https://web.archive.org/web/20201208174144/https://twitter.com/dersi4m/status/839526688954466304 

"Collapse of the Solar Stocks"

We have had nothing to do with these names for the last fifteen years or so.

It is hard enough to identify the class-of-the-field, in the case of the solars: FSLR, and wend our way through the vagaries of that one issue than to track the dreck (or eventual dreck).

From Wolf Street, January 23:

This is about stock market craziness, not about solar power.

This is about stock prices that get inflated beyond recognition on nothing but wild mania, and when the mania subsides, the stocks collapse and are inducted into our pantheon of Imploded Stocks. And we’re going to look at eight of these imploded solar stocks.

This is not about solar power. Rooftop and utility-scale solar installations are now a fairly large business. Utility-scale batteries have become a profitable way of arbitraging the highly volatile electricity spot prices that can spike during high-demand hours and plunge during low-demand hours, and in this arbitrage, batteries work well with big solar installations, buying electricity when the price is low, and selling when it’s high. And they work well with small-scale solar too. Some of the eight companies here are involved with both solar power and energy storage.

There are up-front costs with solar power, as there are with every power plant. But with solar, the “fuel” is free for the life of the installation, and the math has been getting better as the price of photovoltaic panels has come down over the years. In 2023, the share of electricity generated by small-scale and utility-scale solar installations rose to 5.6% of the total electricity generated in the US.

The eight companies here are sort of pure-plays in the solar-power field. Big utilities are all over solar power, as are big equipment providers, and of course, Tesla. But these eight companies here are specialized players, many of them with over 1,000 employees at the peak, and with hundreds of millions to several billion in annual revenues.

Globally, about 85% of the photovoltaic panels are manufactured in China, which is also its own biggest customer. Vietnam is #2 with a share of a little over 3%. There are some efforts underway to boost manufacturing of photovoltaic panels in the US, to not be so totally dependent on China. But that will take a while to pan out.

This is about stock market craziness, not about solar power.

SunPower has been around for a long time. It went public in 2005 as a spin-off from Cypress Semiconductor. It was one of the big boys at the time.

Its stock experienced two huge bubbles. The first in 2006-2007 when it went from $20 a share to $100. The second started in May 2020, when free money turned brains to mush, and the stock multiplied by 12, from $4 a share to $54 a share in about 18 months to peak in January 2021. Then it collapsed.

There was a mix of operational issues, years of substantial losses, accounting issues, missed filing deadlines, defaults, etc., etc. When it could no longer raise new cash to burn, after it had already burned everything it had, it was over.

In August 2024, SunPower filed for bankruptcy. Most of its assets were acquired by solar SPAC Complete Solaria for $45 million (more in a moment), and SunPower’s shares and investors got wiped out.

This stuff happens. What was crazy were the two spikes in share prices on nothing but mass-mania, and after it subsided, the stock collapsed to zero (data via YCharts).

Complete Solaria [CSLR], the residential solar systems provider that acquired SunPower’s assets for $45 million, had gone public via merger with a SPAC in July 2023, an amazing feat, given that the ignominious SPAC bubble had already collapsed. From the merger-share price of $10 a share, the stock has plunged by 81% to about $1.90 currently, including a slick rug-pull right after the SPAC merger was completed (data via YCharts).

SolarEdge Technologies [SEDG] makes inverters, batteries, power optimizers, and other equipment for solar systems. Back in 2015, when it went public via IPO, SolarEdge made a deal with Tesla Energy to provide inverters for Tesla’s Powerwall. But eventually, Tesla produced its own inverter.

The company, which is headquartered in Israel and is largely active in Europe, made several acquisitions: In 2018, it acquired a major stake in South Korean maker of battery cells and batteries, Kokam. In 2019, it acquired a majority stake in Italian EV powertrain manufacturer SMRE, and it acquired UPS maker Gamatronic. In 2023, it acquired UK-based software-as-a-service provider Hark Systems.

In prior years, the company booked some net income, but over the past five quarters, it booked massive losses, totaling $1.72 billion, including $1.2 billion in Q3. And sales collapsed in 2024, including by 65% in Q3 2024.

The stock price had multiplied by 10 between early 2019 ($36 a share) and January 2021 ($360 a share), then plunged and spiked a few more times within the same range, before the big kathoomph in the second half of 2023. The stock has now plunged by 96% from the triple peaks in 2021 and 2022:

Sunrun [RUN] makes and installs residential solar systems that it sells as a subscription or financed purchase. The company, which is based in San Francisco, went public via IPO in 2015. There had been some profitable years, but over the past five quarters, it lost $1.45 billion.

The stock had multiplied by 11 between April 2020 ($8.36) and January 2021 ($96.50), but then collapsed and today, closing at $9.23, is down by 91% from that peak....

....MUCH MORE 

Even with First Solar it is not easy:

...On October 30 we posted "First Solar Q3 2024 Earnings Call Transcript (FSLR)" with the intro line "It sounds like dead money for at least a quarter." Straight analysis in ten words informed by a lifetime at the market.

So far so good.

On November 2 the Des Moines Register published "Iowa Poll: Kamala Harris leapfrogs Donald Trump to take lead near Election Day. Here's how" about which the BBC gushed:

Pollster explains why Harris leads in Iowa poll 

A new poll of voters in Iowa suggests that Kamala Harris is leading with 47% over Donald Trump's 44%.

The survey was released by the highly regarded pollster Ann Selzer, who regularly carries out surveys for the Des Moines Register newspaper....

MarketWatch did not refer to the "highly regarded pollster", instead going with "Trump election odds tumble on betting markets after Iowa poll shows Harris lead".

The stock which had traded as low as $183.68 on October 30 (closing at $197.50), hit $221.20 on November 4.

 

This morning's MarketWatch story is headlined "Renewable-energy stocks tank after Trump wins White House"

The stock is trading at $183.20 down $32.69 (-15.14%).

....MUCH MORE

Here's six months of price action via TradingView:

That is indeed what the old-times used to call "dead money." Good fun though in early November. You can see when the political pollster Ann Selzer claimed Vice-President Harris was ahead by three percentage points.

Guided by the first inductee into the Climateer Hall of Fame we have attempted to avoid the traps and pitfalls the equity market is littered with:

Finally for investors in rent-seeking organizations there is the real risk that the politicians will change the rules. Heed the words of Sen. Simon Cameron (R&D!-Pa.):

Our Hero

"The honest politician is one who when 

he is bought, will stay bought."

That's an April 2009 iteration of the boilerplate in "RENEWED ENERGY: Solar Seeks Special Place in Climate Bill (Rentseeking to the Fifth)".

Why Did New York Magazine Cut Out The Black People?

The cover of the magazine:

The uncropped version:

 

The story at the Hollywood Reporter.

The politicized press is beyond loathsome. They are like something you try to scrape off your shoe before entering a building.

Batteries: Sweden's Northvolt Scrambles To Avoid Liquidation

The company is already in reorganization.

From Reuters, January 31

Exclusive: Scania tries to breathe life into troubled EV battery maker Northvolt 

• Scania is supporting Northvolt's operations in Sweden
• Scania staff heavily involved in day-to-day running of Northvolt Ett plant, documents
• Northvolt faces financial struggles, needs $1.29 bln to overhaul, sources
• Northvolt filed for Chapter 11 after financing talks collapsed

STOCKHOLM, Jan 31 (Reuters) - Truckmaker Scania has stepped in to help Northvolt with the day-to-day running of its flagship plant in northern Sweden, a last-ditch effort to boost quality and output at the struggling electric vehicle battery maker as it scrambles to secure funds.

Since November, Scania has sent members of staff to Northvolt's Ett plant in Skelleftea, 200 kilometres below the Arctic Circle, according to internal Northvolt documents reviewed by Reuters that outline Scania's support strategy for the green tech player. The plant employs some 2,500 people.

Four Northvolt workers told Reuters they had seen Scania employees, identifiable by an orange visitor armband, inside the factory in recent months, with one saying this was happening as late as this week.

 

Scania acknowledged to Reuters that it was assisting with the production ramp-up and that it had sent staff to the Northvolt Ett plant for a period, but declined to provide further comment.

 

Under the support plan, which has not been reported, each Scania staff member is to be paired with a Northvolt shift manager or team leader to "coach" teams while "simultaneously helping to drive improvements and implement standards", an internal presentation dated early November read....

....MUCH MORE

And from Reuters via MSN, January 29:

STOCKHOLM (Reuters) - Volvo Cars has signed an agreement to buy struggling Swedish battery maker Northvolt's stake in their joint battery venture NOVO Energy, the Sweden-based automaker said on Wednesday, without disclosing the price.

Volvo Cars and Northvolt, which is under bankruptcy protection, formed the joint venture in 2021 to build a battery factory in Gothenburg on Sweden's west coast. The carmaker said in October it would need a new partner to keep plans for the factory on track....

....MUCH MORE  

If interested see also:

Batteries: "Northvolt says subsidiary files for bankruptcy after project pulled"

So far it's compartmentalized but the parent company is also facing financing and sales problems, more after the jump....

***

...There was a reason we titled September 5's post "Portents" - "Portents: Sweden's Northvolt may postpone $5bn Quebec battery plant by up to 18 months". It was a sign of things to come, including September 25's Batteries: "Sweden’s Northvolt to Cut 20% of Staff Amid Liquidity Crunch"

Batteries: Sweden's Northvolt Has Hired A Restructuring Expert 

"Battery unicorn Northvolt files for bankruptcy, upending Europe’s industrial plan"

The electric vehicle business is not an easy one.